FUNCTIONAL INCOME DISTRIBUTION AND GROWTH IN SOUTH KOREA: A POST KEYNESIAN ECONOMETRIC ANALYSIS

Year 2017, Volume: 39 Issue: 2, 555 - 578, 24.12.2017

Ozan Ekin Kurt

https://doi.org/10.14780/muiibd.384208

Abstract

The aim of this article is to analyze the short-term impact of functional income distribution on aggregate

demand and its components in South Korea within a post Keynesian framework, in which demand

regime of an economy is either wage or profit-led. The article firstly portrays the structural change and

the macroeconomic performance of South Korea, and then presents the evolution of the labor income

share in the country. The article follows with the presentation of the theoretical model employed for the

analysis of the demand regime in the country and offers a survey of the empirical literature of the post

Keynesian models of income distribution and growth. Then takes place the econometric analysis and the

article proceeds with the evaluation of the results and concludes. The econometric investigation shows that,

over the period 1970–2011, the growth regime of the domestic economy is wage-led, while that of the total

economy is profit-led. The results are partially in contradiction with those already found in the literature

and point that pro-labor growth policies are not viable within the current structure of the South Korean

economy in the short run.

Keywords

Income Distribution, Demand, Growth, Post Keynesian Economics, South Korea

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